From Sparks to Fired
4 February 2015
From Sparks to Fired: Case Study
1. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management (ERM) – Integrated Framework (2004) is a guideline for managing risk and understanding internal controls. The eight components of the COSO ERM Framework are as followed: internal environment, objective setting, event identification, risk assessment, control activities, information and communication, and lastly, monitoring. Here we define/describe these eight components:
a. The Internal Environment captures the tone of the organization and the sets the standard on how risk is viewed and addressed by the entity’s members. The entity will …show more content…
Internal Environment Segregation of duties Sparks did a great job allowing his assistant to help with validating his salespeople’s transaction; however, he should have followed up with her and validated her processes. This would have allowed his assistant to express her lack of power and confidence with the salespeople who were aggressive with her.
Monitoring/Control Activities/Information and Communication Efficient expense tracking Having an accounting system that can efficiently track and create expense reports will allow the Sales Manager to properly track employee’s expenses. The proper approval/authorization can also be a part of this process. The Sales Manager can be alerted when transactions are reported above a certain amount and a detailed explanation must be provided with it.
3. Relevant Principles and Standards that have been violated by the company’s employees with examples:
Principle Violated Example
Honesty – Requires conscientious application to the task at hand and truthfulness in all analyses and communications Sales personnel lied on expense reports in order to have meals approved and submitted duplicate expenses for reimbursement.
Integrity - Mitigate actual conflicts of interest, regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. Sales personnel submitted meal receipts for a charity, when in fact the charity was actually a gentlemen’s club.